Bargaining Away The Safety Net

Your triumphant leader couldn’t have been reelected without you and now he will show us how “flexible” he really is. Obama won’t only touch his toes but he’ll begin “compromising” away liberals most cherished programs to avert the concurrent tax increases and spending cuts scheduled for January 1st.

In his first public comment since the election Obama reiterated his promise to middle and lower class Americans: “I refuse to accept any approach that isn’t balanced. I will not ask students or seniors or middle-class families to pay down the entire deficit while people making over $250,000 aren’t asked to pay a dime more in taxes.” This promise is hollow. Obama has already set the tone for how the Democrats will go about negotiating a solution to the impending $700 billion in tax increases and spending cuts-what the Republican Party has labeled the fiscal cliff. The Democrats are “open to compromise.” Speaking of the deficit and tax debates that will begin on Friday, Harry Reid echoed Obama’s conciliatory tone, “everything doesn’t have to be fight.” The problem is, and not for the Democrats but for those who elected them to lead the country, that fighting to save programs like Medicaid, Medicare, Social Security and food stamps from the budget cutting axe were considered paramount by those who voted for the Democrats in this election. Now you have the newly reelected President and his Senate Majority Leader saying that these programs might not be worth fighting for as America faces “immanent Armageddon.” Our susceptibility to politically manufactured distortions proves resilient.

The real catastrophe that middle and lower class Americans face is the trimming to or undoing of the few remaining institutions that protect society’s most vulnerable from the turbulence of markets and the privations of unemployment; not growing deficits. It’s as if the social programs that play an instrumental role in protecting poor and struggling people should take back seat to sound budgets, manageable deficits and strong national credit ratings even though the economy isn’t a person and hasn’t, save in some abstract sense, suffered.

Obama’s admission, “I am not wedded to every detail of my plan” demonstrates his willingness to make concessions before his second term commences putting the economy before people. By offering compromise to an inveterately unyielding Republican Party before first laying down a bold plan Obama is in effect succumbing to stubborn House Republican demands. Republicans and the business elites who invested billions in their campaigns want nothing more than to let “entitlements” continue their 30 year liquidation plan. Despite the nonpartisan Joint Committee on Taxation’s findings that restoring the highest marginal tax rates to what they were under Clinton would generate at least $40 billion in revenue in 2013 Republicans won’t budge on raising taxes on America’s top earners. Democrats know this. Over the past few days Obama has indicated that he would rather negotiate a “Grand Bargain” with Republicans early on than endure a protracted “fight” against axe wielding conservatives that could last well into his second term. In this way Obama will be able to eke out his title as a great compromiser before the year’s end allowing himself an entire second term to shape his legacy.

But the outcome of Obama’s eager compromise won’t look so grand. The “deficit scolds” as Paul Krugman calls them want Obama to accept austerity over the long term. This is the logic:

America stands before a fiscal cliff on the brink of falling off into another recession. Federal overspending has largely gotten us here but America still needs to keep itself safe. If we increase federal revenue by “limiting income tax deductions” and closing tax loopholes we can decrease our deficits while avoiding increasing tax rate hikes for everybody. This still won’t be enough to prevent the country from falling back into recession so we ask Americans to make a small collective sacrifice for the country’s prosperity and agree to spending cuts on Medicare, Medicaid, social security, food stamps and other non-discretionary budget measures. We know you just elected the candidate who ran against cutting this stuff but we have to be flexible if we are going to grow again and we definitely can’t touch the defense budget.

In reality Obama’s posturing as the compromiser will amount to modest tax increase at the two highest marginal rates at best, although lately he seems willing to settle for just capping deductions and closing loopholes. Romney made the same proposal during his campaign. Back them Obama ridiculed that plan as a “sketchy deal” that would fall short of raising the revenue needed to keep the deficits in check. What Obama will give up in his compromise is the decades long fight against the “free-market” ideologues and their efforts to put economy before society. Agreeing to sizable cuts in social programs for modest tax increases on the wealthy is not the deal Americans voted him into office to achieve. Once funding for programs like social security are cut as Obama offered during the deficit debates his first term it is unlikely funding will be restored even if the deficits come under control. Once Medicaid funding is cut or the eligibility age is raised or “means testing” is implemented the program millions of struggling Americans depend on will be stretched even thinner imperiling millions more. Obama vehemently ran against this just a week ago.

As the fiscal myth unfolds throughout the next several weeks you can expect a lot of Democrats vowing to never touch Medicaid, Medicare and Social Security. Although these have been their sacred cows you can be sure they have calculated that their actions will be remembered in context of saving the country from financial collapse as opposed to social program murderers. After a couple of weeks of making themselves remembered as social safety net hard asses those same Democrats will return to the table with conservatives behind closed doors and in the nick of time a deal will have emerged to save the country from financial collapse, the “Taxmaggedon” that threatens America’s future. Obama, your exalted leader will appear before the cameras with a pen in hand next to Boehner and sign into law a swath of cuts to the programs his voters cherished. The media will be abuzz with headlines about this historic compromise, filled with stories about Obama making a stand for economic equality by raising taxes on the rich and so on until the skeptics lynch themselves.

In the upcoming weeks be weary of your elected officials who promise not to touch the programs you elected them to protect. Your leader is amidst a Grand Bargain and your senators and representatives support him. With a new compromise signed into law the rich might get a little less richer, for a couple of years (a republican president will come along and cut taxes again claiming thats how you create jobs), but the most vulnerable Americans with the programs they depend canned iced can expect to get a little poorer.